Math getting better? -- CitizenRe

Submitted by brad on Fri, 2007-01-12 15:30
Topic: 
Going Green
Tags: 
citizenre
solar

(Note: I have posted a followup article on CitizenRe as a result of this thread. Also a solar economics spreadsheet.)

I've been writing about the economics of green energy and solar PV, and have been pointed to a very interesting company named CitizenRe. Their offering suggests a major cost reduction to make solar workable.

They're selling PV solar in a new way. Once they go into operation, they install and own the PV panels on your roof, and you commit to buy their output at a rate below your current utility rate. Few apparent catches, though there are some risks if you need to move (though they try to make that easy and will move the system once for those who do a long term contract.) You are also responsible for damage, so you either take the risk of panel damage or insure against it. Typically they provide an underpowered system and insist you live where you can sell back excess to the utility, which makes sense.

But my main question is, how can they afford to do it? They claim to be making their own panels and electrical equipment. Perhaps they can do this at such a better price they can make this affordable. Of course they take the rebates and tax credits which makes a big difference. Even so, they seem to offer panels even in lower-insolation places like New England, and to beat the prices of cheaper utilities which only charge around 8 cents/kwh.

My math suggests that with typical numbers of 2 khw/peak watt/year, to deliver 8 cents/kwh for 25 years requires an installed cost of under $2/peak watt -- even less in the less sunny places. Nobody is even remotely close to this in cost, so this must require considerable reduction from rebates and tax credits.

A few other gotchas -- if you need to re-roof, you must pay about $500 to temporarily remove up to 5kw of panels. And there is the risk that energy will get cheaper, leaving you locked in at a higher rate since you commit to buy all the power from the panels. While many people fear the reverse -- grid power going up in price, where this is a win -- in fact I think that energy getting cheaper is actually a significant risk as more and more money goes into cleantech and innovation in solar and other forms of generation.

It's interesting that they are offering a price to compete with your own local utility. That makes sense in a "charge what the market will bear" style, but it would make more sense to market only to customers buying expensive grid power in states with high insolation (ie. the southwest.)

Even with the risks this seems like a deal with real potential -- if it's real -- and I'll be giving it more thought. Of course, for many, the big deal is that not only do they pay a competitive price, they are much greener, and even provide back-up power during the daytime. I would be interested if any readers know more about this company and their economics.

Update: There is a really detailed comment thread on this post. However, I must warn CitizenRe affiliates that while they must disclose their financial connection, they must also not provide affiliate URLs. Posts with affiliate URLs will be deleted. Some salient details: There is internal dissent. I and many others wonder why an offer this good sounding would want to stain itself by being an MLM-pyramid. Much stuff still undisclosed, some doubt on when installs will take place.

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Comments

Anonymous

Fri, 2007-03-02 05:51

I think Citizenrre is the REAL DEAL MAN !!!!!!

Anonymous

Fri, 2007-03-02 05:54

See this link, scroll down to the bottom and listen to Rob Styler.

Decide for yourself if this guy should be PRESIDENT of the POWUR NETWORK.

If Rob were alive in the late 1800's, he'd be selling the "cure all" elixir.

Rob is a 100% bonafide phony.
http://www.worldwidescam.info/xpatchpromises.htm

Kurt

Sun, 2007-03-04 07:49

I signed up to get a CR system yesterday, and I did it with my eyes fully open. I understand all the questions about the company, and I have many myself, but I signed up anyway. Here’s why.

1. I understand that their model only works if grid price goes up. Here in Florida, I know that grid production price can go down a lot without the overall price falling because the cost of maintaining the grid is so high. The lines took a hell of a beating in the 04 hurricanes, and the new and improved prices we pay reflect that. I will never bet that grid prices will fall anytime in the next decade.
2. I understand that they have no plant, no systems, and no product. We early signers are there to help them get the financing, pure and simple. But if this plan works, it might be the magic bullet. If it doesn’t work, my email address gets sold to another penis pill company and I get a few more offers to do business with a Nigerian colonel. Not a big price to pay.
3. I understand it might be a Ponzi scheme. Aside from the fact that the early signers do pretty well in such a plan, no one has my money and no one will get my money until there is real evidence of real product. Also, if I get a system and the company crashes, do you think the bankruptcy court is going to come a collect my system? I will get to buy a $40k system for $5k from the trustee, who will be glad to collect that much.
4. I understand it is just a long term rental. But I’m paying money (a lot of it) to Florida Power and Light, every month, which in the end feels much like a lease.
5. I understand that their model makes possibly unreasonable assumptions about their economy of scale. They may well lose money for a while (see Amazon, Sirius, et al.). But if it works …

I want solar. I want it very badly. I am tired of my taxes going to pay for a military that is nothing but an oil protection service. I was out of my house for 6 months after the 04 hurricanes, and I fully believe global warming will make future storms worse. I want to do something real NOW. I don’t know that CR is the way, but it is the best idea I’ve heard in a long time, and it costs me nothing.

Kurt Erlenbach

brad

Sun, 2007-03-04 13:32

Yup, these are all valid arguments. I know the existing solar vendors have an argument against this -- if you are serious about solar, the sort of person who might be buying panels today from shipping vendors -- then if this doesn't pan out you will be delayed a few years from actually going solar, and being their customer. This is the issue with all questions of vapourware: does it delay real or abort real purchases in hope of vapour?

So I take it they are not asking for the deposit. I am curious as to when the deposit actually gets collected. I had read it was "once you approve the design" and not "upon install." The real question is what you will do when they come to ask for the deposit.

If the panels are quality panels, I think the receiver will want to take them from your house, but indeed, you will be able to buy them at a slightly below market price if they are doing that. Whoever buys the assets may not want to negotiate, but they'll probably have a fixed offer to the homeowners.

Now, since ship-today solar is a great deal more expensive than CitizenRe's promise, there are many customers who would never pay today's prices but are interested in CitizenRe. I see no reason for them not to sign up, as long as there is no deposit taken and they can cancel the contract any time before the deposit is taken. They're not hurt, even if it all goes up in smoke. For a customer seriously considering today's solar, it's a harder question.

(Solar is economical in California for customers at 2xbaseline usage.)

Frank Knight

Thu, 2007-06-07 17:55

Howdy Brad,
As far as the deposit goes nothing will be collected until panels are manufactured and ready for installation so that will be awhile yet. The engineer will show up with a tablet PC and have a CAD drawing of what their installation will look like and what their monthly charges will be, at that time a minimum deposit of $500 for 2Kw-5Kw systems will be due for larger systems up to 10Kw the deposit is $1,000 it works out to an additional $100 per Kw.
Earlier also you posted about the charge to remove the system. With 1 and 5 years terms there is a charge but with a 25-year system there is no charge and Citizenre will move the system 1 time for free to a new location. The 25-year deal is the most attractive and is what I signed up for... I dig the idea of paying the same for power for 25-years with no rate increase.
Citizenre also has a new referral program implemented where if a customer refers another customer, they will receive 5% of what the referred person pays for power deducted from their bill. A customer could literally earn free power from Citizenre if they refer enough customers.
Peace,
Frank

Anonymous

Wed, 2007-06-13 15:48

Has anyone looked into the legal/regulatory concerns (and resulting costs) involved? Existing utilities will likely argue that Citizenre itself is a utility subject to state public utility commission jurisdiction. These utilities will argue that Citizenre is violating existing territorial agreements by selling directly to its customers. Citizenre appears to be avoiding this by making it seem as though they are simply "renting" the solar equipment; however their metering and billing plan presents some potential issues. Also, many utilities have terms in their interconnection and net metering standards which require the customers with on-site generation to own and install safety equipment to protect the grid. Who pays the associated costs?

Finally, as programs like this grow in popularity, states (and individual unregulated utilities) that have adopted net metering standards will realize that net metering is not financially sound (i.e. utilities must still maintain capacity for their entire load, and utilities are required to pay retail rates for chep on-site generation), and will drop or severly limit the standards upon which Citizenre depends. What happens then?

Anonymous

Mon, 2007-06-18 16:13

I have been in MLM before, Amway and Photomax.

It seems that each one is more focused on getting a "downline" then on providing a product or service and based on the model why should you. For instance..

When someone signs up below you they pay a fee of some sort, usually a kit is included and there are different levels to buy in at. As soon as they buy in you get a commission/kickback depending on the level they buy in at. So, right of the bat you are incentivized (sp) to just sign up people (Friends and Family!)regardless if they are interested in the product/service that the company provides. Once you get a group in you sit them down and convince them to do the same thing. If the person is more then one level below you then your commission is less but exponentialy you are generating larger and large numbers, hence the pyramid shape. So, without selling a single widget you can make a ton of money. Here is another item to chew on.... When you signup your "upline" will sit down with you and have a commtiment meeting, "Hey new guy/gal if you really want to show your downline how committed you are then you need to be on the $50/month vitamin repurchase program, this way they will see your commitment and duplicate" of course the get a cut on this, but again you are not really buying the program your buying an example to set for your downline which you hope will do the same and thus get your cut.

Wow! Makes you want to use mouthwash!

I am an ecopreneur, I paid nothing and get nothing when signing someone below me, and nothing below him/her. I only get paid when someone installs a system, not when they sign. If anyone below my has a customer install a system then I get paid, not when they sign them up.

It would have been good of CR to come up with its own marketing/sales name instead of MLM, but I guess its to late now.

Alex

Brian

Tue, 2007-06-19 09:42

I've read lots of these type of blogs on Citizenre, and it is iteresting to see how may "ecopreneurs" admit that they have been involved in MLM schemes in the past...then they swear that this one is different. It just goes to show the type of people that this compay is drawing for its sales associates.

Take this comment as you will...just seems interesting to me.

CORK!

Mon, 2007-07-02 07:52

Does anyone (I include Rob here...) have any recent news on the program? I am just wondering if ground has been broken on the manufacturing facility, if investors were announced, if they anyone even knows WHERE the plant will be, etc. Seems like there have been no new developments since February as far as I can tell.

SolarKismet

Mon, 2007-08-27 10:50

CitizenRE now has a competitor, and they'll install the first solar panel before CitizenRE does...

Anonymous

Sat, 2007-12-15 13:34

It seems that most of the comments revolve around whether or not the consumer will save money. For me, that is not even a consideration. I cannot afford to risk many thousands of dollars on a solar installation. But, an experiment with low cost that moves some of my own use from grid-supported to solar-supported, is a very attractive option! If I pay a little more, the same, or less than the utility company charges, that is not important. Reducing my impact on the environment is! Why not see if it will work?

brad

Sun, 2007-12-16 14:15

While there are a fair number who will spend more on their power to "do the right thing" environmentally, they are still too few to make the real difference that must be made. Thus, unfortunately, what really matters is making it economically competitive. Cheaper than fossil fuels is best, though something can be done if you get nearer to them, especially if the fossil fuels get externality taxes put on them.

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